How to sell your business? It is a question that is quite difficult to answer because you need to start at a 30,000-foot view and go down and land the plane. What you need first to understand is that buying and selling small businesses is inefficient if you don’t know how to create deal tension and process. Without these things, you will be left with one or two choices to sell your business, and that’s not good. Why? Because you are not going to sell your business for maximum value. Chances are you will take some unfavorable terms.
Selling a business is more of a partnership. One of the reasons small business deals fall through is because the financials take a nosedive. Selling a business is a full-time job, and by the partnership, it means the client continues to run the business while the brokerage firm runs the sales process. As a CEO, your primary goal is to maximize your profit to prevent the deal from going backward and eventually losing a deal.
Finding the right broker
A broker that sells a business is different from a broker than sales real estate properties. Just because somebody said, he is a broker does not necessarily mean that he is the best person to help you in selling your business. When finding the right broker make sure he is an entrepreneur as he understands how the business works. Having the right broker can make a huge difference in your valuation.
The business of selling companies is exceptionally complicated. You have to recast financials, comparable, market timing, selling buyers on a deal or not – it’s a complicated matter. Having a broker makes much sense. If you are running a business and the broker is getting it ready, there’s a couple of things that determine how successful the partnership is. Timing is essential. Ideally, you should start working with a broker a year before you are ready to sell your business as it allows the broker to do much excellent positioning.
Aside from timing, you also need to look at your market comparable. The right broker will help you in finding the comparable, give you a range, and employ measures to have your business on the maximum side of that range. While timing is necessary, you have to keep in mind that there are factors that could affect timing, and such the brokers have no control over such as a shift in tax policy and dollar policy, or tax is going up or down. They are like tides on the ocean; you can’t control them.
However, a good broker knows how to work with those constraints and opposed to working outside those constraints. If you are ready to sell your business, do not hesitate to contact Freedom Factory. It is one of the best brokerage firms in the country run by a serial entrepreneur, Robert Hirsch. Together with his team, they help entrepreneurs sell their business at the highest sales price possible.
Check out the Podcast How Do I Sell My Business?